ROLE OF ENVIRONMENTAL ACCOUNTING IN CEMENT MANUFACTURING COMPANIES IN NIGERIA
: A STUDY OF ASHAKA CEMENT PLC, ASHAKA, GOMBE STATE
This paper is about environmental accounting. It aimed at discussing on the most important tools for the application of environmental accounting which include legislation, incentives and accounting staff as well as acknowledging general framework and concepts of environmental accounting. Secondary data for the study were obtained through reference, research, and Nigerian and foreign universities research papers. For the initial data, they were collected through a questionnaire study. Chi-square was used in the analysis of the responses to the questionnaires. The study found out that the availability of these elements will contribute to the application of environmental accounting. The study recommended educating accountants and financial managers and corporate departments of the concepts of environmental accounting, and its general framework, also urged to endorse binding legislation and accounting standards guidance for their application. In addition to establishing a system of incentives, various tax and governmental exemptions, so that to encourage companies to implement environmental accounting.
Keywords: Environmental accounting, Legislations, Incentives
Accounting has an instrumental role in disclosing environmental responsibility for different entities whether industrial or commercial services, and at all levels whether micro or macro. Thus, accounting became concerned with achieving new goals such as measuring and evaluating potential or actual environmental impacts of projects and organizations. These new goals are of great importance as they enable many users to take different development decisions that are economically and environmentally sound (Bala and Yusuf, 2003). The awareness of the environmental and man’s ability to cause damage started from the fifties of the 19th century. This concern had been repeatedly expressed in series of international summits and consensus right from the sixties. The starting point that comprised an organized thought proves on a large scale the celebrated public action of the club of Rome entitled “Limits to Growth” that initiated a worldwide debate of economic growth at the expense of natural environment (Shil and Iqbal, 2005). The world conference held in Stockholm on global environment in 1972 (June), where the heads of the states all over the world came together for the first time, was the pivotal event in the growth of the global environment movement. The concept has been generated in accounting thought as a result of the perception of the business enterprises that its role must not be productive, and trying to gain profit only, but that there is a responsibility and social and environmental goals that should be borne by the industrial companies towards the society and the environment.
- Problem of the study
Most of the financial departments of the companies have the conviction of the importance of application of environmental accounting in manufacturing companies in general, but it is apparent from the other hand, the non-application of the environmental accounting procedures of measurement, processing of accounting and reporting (Al-Khouli: 2004).
The problem of the study can be formulated in the following question:
- To what extend is the need for the application of Environmental Accounting and reporting it in Nigerian Manufacturing companies?
- Objectives of the study
- To analyzed the concept of environmental accounting and its general framework in order to assist in applying it.
- Significant of the study
This study was done to clarify the importance of the need to environmental accounting, as this field continues to suffer deficiencies in the Nigerian accounting system.
Identifying the views of financial and accountants opinions about what should be saved from the elements for the application of environmental accounting and therefore, that would lead to the effective application of environmental accounting and demonstrate financial lists and environmental reports, which lead to changes in consumer behavior for moving to deal with companies that show their efforts in reducing the negative environmental impacts resulting in increasing in profitability and competitiveness.
Shedding light on the role that legislations can perform in encouraging, urging, or binding companies to implement environmental accounting.
It is expected that this study will develop management comprehension to adopt implementing environmental accounting idea in their firms.
This study is a contribution to the achievement of social demand adopted by the bodies and governmental and private environmental organizations with respect to environmental matters and determines the cost of damages and ways of solving it.
- Hypotheses of the study
H0: The management does not fully appreciate the importance and benefits of applying environmental accounting in planning and decision making.
H1: The management fully appreciates the importance and benefits of applying environmental accounting in planning and decision making.
- Previous Studies and Conceptual Framework
6.1 Previous Studies
A study of (Johnson, 2009) stresses on the term green accounting which has been around since the 1980s, and is known as a management tool used for a variety of purposes, such as improving environmental performance, controlling costs, investing in “cleaner” technologies, developing “greener” processes and products, and forming decisions related to their business activities.
(Bartolomeo: 1997) study aimed at identifying the method used in dealing with the environmental issues in some Italian companies in terms of accounting, it was found also that there is an obvious weakness in the Italian companies in dealing with the environmental accounting, as they contain only some aspects of the disclosure of environmental impact caused by industrial facilities to the surrounding environment.
(O’ Donovan 2002) study also aimed at improving the usage and application of the legal characteristics theory through possible links between the three elements: event or environmental technology, which is expected to result from it a legal threat to the facility, choosing between the legal characteristics theory and disclosure, which entails each of them in the annual reports, and the aim of choosing this method may be the formation or maintenance or repair the legal position of the company. The results showed that the importance of the event or the environmental issue has a substantial effect on the decisions of disclosure, companies only disclose the significant environmental events and of medium importance, and therefore the less important events which do not pose a threat to the legal position of the company’s business will not affect usually choosing the legal characteristics theory and do not affect the volume of disclosure in annual reports. (Roussey, 1992) study aimed at analyzing the laws and legislations relating to environmental pollution control in the USA, and the extent of industrial facilities commitment to these laws and legislation, where and the assessment of the costs of cleaning disposal sites and industrial waste, in addition to question about commitments resulting from environmental fines and the importance of reviewing and preparing reports related to possible obligations resulting from abiding by environmental laws and legislations.
(Robbins, 1991) study pointed out the environmental issues and problems become within industrial companies strategies in the European countries and in the USA, where the disclosure of the environmental information was expanded, whether such disclosure relating to judicial claims expected from environmental damage and their expected financial impact, or the expected environmental events and its impact on the financial position and future business outcomes. The study also concluded that the outside reviewer must be familiar with environmental aspects which affect in the obligations and assets values, and should define the financial lists for environmental obligations. He is also obliged to define companies’ commitment of laws and legislations related to the disposal of industrial waste and others which may be a reason for environmental pollution.
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